Structures Understanding Business Higher Business Management 1

Organisation Charts Business Structures Shows how the business operates Defines the role and responsibility of employees Could be formal or informal

Organisation Structures Organisation Charts Organisation Structures Hierarchical Structure Eg Coltness High School Mr McGilp Deputes Faculty Heads Teaching Staff Decisions and instructions are passed from one level to another – one level is above another

Organisation Structures Organisation Charts Organisation Structures Span of Control – how many staff someone is in charge of Hierarchical Structure Managing Director Senior Managers Middle Managers Workers Lateral Relationships Line Relationships

Organisation Structures Organisation Charts Organisation Structures Flat Structure Managing Director Workers

Organisation Structures Organisation Charts Organisation Structures Tall Structure Managing Director Senior Managers Middle Managers Workers Chain of Command – how instructions are passed from one level to another

Organisation Structures Centralised Important decisions are made at the head office Very little delegation Easier to promote a corporate image Decentralised Important decisions made by managers Employees are motivated and empowered

tasks – no hierarchy – everyone is empowered Organisation Charts Organisation Structures Matrix Structure Specialists are in project teams to have specific tasks – no hierarchy – everyone is empowered Marketing Sales R&D Project HR Production Finance 8

Organisation Structures Organisation Charts Decisions are made centrally usually with very little staff input – relies on a few key workers Entrepreneurial MD Finance Production Sales Marketing R&D 9

Structure Key Terms Some Key Terms Authority Span of control the right to make decisions and carry out tasks Span of control the number of people a superior is responsible for Chain of Command the relationship between different levels of authority in the business Hierarchy shows the line management in the business and who has specific responsibilities Delegation authority to carry out actions passed from superior to subordinate Empowerment giving responsibilities to people at all levels of the business to make decisions Line relationship vertical line on an organisation chart Functional/Lateral relationship horizontal line on an organisation chart

Questions - 1 Some Key Terms What is meant by a Business structure? What is a Tall Hierarchical Structure? What is an advantage of a Flat Hierarchical structure Compare a Matrix structure with a Hierarchical structure. What is meant by a Span of Control?

Grouping of Activities for a Business Structure By function: Arranging the business according to what each section or department does By product or activity: Organising according to the different products made By place: Geographical or regional structure By customer: Where different customer groups have different needs By process/technology: Where products have to go through stages as they are made Features, characteristics, benefits and drawbacks of different organisational structures

Functional Structure Functional Structure Managing Director Sales Marketing Human Resources Recruitment Training Finance R and D Operations Warehouse Manager Quality Company Secretary 13

Functional Structure Functional Structure Advantages Specialisation – each department focuses on its own work Accountability – someone is responsible for the section Clarity – know your and others’ roles Disadvantages Closed communication could lead to lack of focus Departments can become resistant to change Coordination may take too long Gap between top and bottom

Product/Service Structure

Organisation by Product/Activity Product/Service Structure Advantages Expertise can develop in dealing with each product/service Managers can easily identify how each product is performing Decisions can be more responsive to changes in the business environment Disadvantages Duplication of functions (e.g. different sales force for each division) Divisions may find themselves competing with each other Lack of central control over each separate division

Place Structure Organisation by Place Coca Cola

Place Structure Organisation by Place Advantages Serve local needs better More effective communication between firm and local customers Better knowledge of local staff Disadvantages Conflict between local and central management Duplication of resources and functions

Customer Structure Organisation by Place Coca Cola

Customer Structure Organisation by Place Advantages Service, price and promotion are geared towards the specific customer needs Improved customer loyalty due to the service given Management can identify poorly performing groupings Can change responses due to the changing needs of customers Disadvantages New groups of customers require a whole new group of staff to be employed Duplication of equipment, administration and staffing

Process/Technology Structure Organisation by Place Coca Cola

Process/Technology Structure Organisation by Place Process/Technology Structure Advantages Good for large manufacturing business with different production processes Increased specialisation of employees as their training is concentrated Easier for management to identify production problems Disadvantages Often technology groupings focus on their own objectives instead of organisational objectives Duplication of equipment, administration and staffing

Questions - 2 Some Key Terms Give 3 ways of structuring a business according to the grouping of activities. Why are there lots of ways of organising activities? What is the difference between Place Structure and Product Structure and give an example of a company who would organise themselves these ways?

Your Task Some Key Terms Use the worksheet and find out companies who would organise their activities in each category of grouping.

Past Paper Questions Some Key Terms Discuss the use of Geographical grouping. 3 marks Describe the effects of widening the span of control for a manager. 5 marks Describe the main features of an entrepreneurial structure Explain the advantages to an organisation of using functional grouping. 4 marks

Discuss the use of Geographical grouping. (3) Some Key Terms

Describe the effects of widening the span of control for a manager. (5) Some Key Terms

Describe the main features of an entrepreneurial structure. (3) Some Key Terms

Explain the advantages to an organisation of using functional grouping Some Key Terms